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Optimal transportation policy with strategic locational choice

  • Thisse, Jacques-Francois
  • Wildasin, David E.

This paper presents a model of strategic locational choice by duopolistic firms in an urban area where consumer locations are endogenous and where a public facility is exogenously fixed. A welfare analysis taking their strategic behaviour into account is conducted. It is shown that the firms' equilibrium locations often differ from the optimal locations which, in contrast to standard location theory, are not at the quartiles of the urban area. Corrective transportation taxes or subsidies can be used to support an optimal locational structure. Changes in transportation costs require unit-for-unit offsetting changes in transportation taxes or subsidies.

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Article provided by Elsevier in its journal Regional Science and Urban Economics.

Volume (Year): 25 (1995)
Issue (Month): 4 (August)
Pages: 395-410

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Handle: RePEc:eee:regeco:v:25:y:1995:i:4:p:395-410
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  1. Fujita,Masahisa, 1989. "Urban Economic Theory," Cambridge Books, Cambridge University Press, number 9780521346627, October.
  2. Kanemoto, Yoshitsugu, 1980. "Theories of urban externalities," MPRA Paper 24614, University Library of Munich, Germany.
  3. Thisse, Jacques-Francois, 1993. "Oligopoly and the polarization of space," European Economic Review, Elsevier, vol. 37(2-3), pages 299-307, April.
  4. Fujita, Masahisa & Thisse, Jacques-Francois, 1986. "Spatial Competition with a Land Market: Hotelling and Von Thunen Unified," Review of Economic Studies, Wiley Blackwell, vol. 53(5), pages 819-41, October.
  5. THISSE, Jacques & WILDASIN, David, 1990. "Public facility location and urban spatial structure. Equilibrium and welfare analysis," CORE Discussion Papers 1990025, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  6. Fujita, Masahisa & Thisse, Jacques-Francois, 1991. "Spatial duopoly and residential structure," Journal of Urban Economics, Elsevier, vol. 30(1), pages 27-47, July.
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